The Financial data of the consumers were not owned by them. Banks and premier financial institutions controlled everything from what and how much proportion money came into an account, to where that cash was spent. While technology has already changed a number of these processes, just like the way we pay or move the finances around, when it involves control over our data, the system has remained unchanged for many years.
Open Banking has disrupted the established order, a decade on, and because of APIs that underpin Open Banking infrastructure, consumers now have more control over their financial data than ever before.
Handing back the control on their Consumers: –
Before Open Banking, consumers were at the mercy of the banks when it came to accessing their own data. there have been only two ways to leverage the financial data in personal accounts to urge better deals and access fundamental services. the primary involved consumers physically printing or downloading a PDF of their statement to share with other banks or third-party providers (TPPs).
The second saw banks and third parties utilise screen scraping. This meant users had to share their username and password to grant access to their checking account, to, for instance, feed into money management tools or to access account information. Both options are long and awkward, but option two left consumers in danger of fraud and data breaches unless they remembered to vary their passwords.
Reducing account fraud & data breaches
Many organisations have legacy IT systems which utilise screen rubbing. This practice easily leaves systems hospitable data breaches. In fact, the Commonwealth Bank has reported that companies using screen scraping are a minimum of twice more likely to experience account fraud. Not only is that this bad for consumers, businesses also can be badly hit by the repercussions.
Thankfully, as of March 14th, a mixture of SCA and PSD2 regulations mean that screen scraping has effectively been outlawed – significantly increasing the safety of payments. the sole secure way of accessing account information is thru an API. Now, every individual payment requires a singular authorisation token, which once used, can’t be used again.
Even tokens for recurring payments, like standing orders for mortgage repayments, are often revoked and immediately rendered useless if suspicious activity is detected. This has greatly increased the safety for consumers who make payments online.
Flouting down barriers with APIs: –
Open Banking was given a narrower focus than within the EU and as well as the UK – only the nine largest banks were mandated to supply TPPs access to their services and data. However, it did specify one, pre-defined API (Application Programming Interface) that was set because the standard for integration. While not as immediate needless to say, banks did eventually observe progress in opening up these APIs, and it’s led to the creation of latest services. Moreover, APIs are instrumental in handing back control of monetary data to consumers.
Leading into an Open Finance future: –
Thanks to these APIs, we are seeing the worldwide growth of Open Banking. Now, consumers can choose when to remain or go, also as what proportion information they need to share, with whom and for a way long. this is often a crucial move as long as many as 15 million people within the UK might be using the incorrect financial services product for them. In fact, around two million people miss out on the simplest interest rates and 4 million are denied credit annually.
Further, we’re not only during a world already reaping the advantages of Open Banking. We’re also moving towards a financial services industry powered by Open Finance, where laborious processes like mortgage applications are going to be gone.
Data that might have historically taken weeks or months to manually compile and send to the bank for review are going to be collated in minutes. Credit scores to ID verification, property affordability and residential checks will all be securely and seamlessly accessed because of open APIs.
This may greatly reduce the lag time between application and acceptance or rejection – giving consumers greater control over the entire mortgage process. In a world powered by Open Banking and Open Finance, consumers now have more control over their financial data than ever before. we will expect to ascertain financial inclusion for the unbanked and a far better experience for those with existing products and services.